Microsoft Acquires eShop Inc.

Acquisition of Critically Acclaimed Pioneer in Internet Retailing To Accelerate Microsoft Development of Leading Electronic Commerce Solutions

REDMOND, Wash., June 11, 1996 —
Microsoft Corp. today announced the acquisition of eShop Inc., a leader in Internet commerce software technology based in San Mateo, Calif. Widely known for its state-of-the-art Internet shopping mall, eShop Plaza, the company is also the developer of eShop Technology, the leading merchandising and shopping system that merchants use to build online commerce operations.

eShop’s technologies and expertise in online commerce will be integrated into the Microsoft®
Merchant product – a comprehensive solution for Internet retailing that provides sophisticated server functionality and tools to build and operate dynamic, fully merchandised online stores and malls. In addition to enabling individual businesses to use the Internet for retailing, Microsoft Merchant provides the retailing component for Microsoft’s new commerical services platform for the Internet, code-named
Microsoft Merchant is built on the Microsoft Internet Security Framework to provide businesses with the most comprehensive and secure electronic-commerce solutions.

“The lack of integrated electronic-commerce solutions is a key reason for the slow adoption of electronic commerce by merchants,”
said Paul Maritz, group vice president of the platforms group at Microsoft.
“Currently, merchants are forced to either build their own custom electronic-commerce applications or purchase server-based software that requires expensive customization and consulting. In adding the functionality of eShop’s technologies, Microsoft furthers its development of a comprehensive electronic-commerce solution to help make it easy and cost-effective for merchants to build successful online store operations that integrate with their existing information systems.”

“We’ve been working with eShop because it offers the best Internet shopping technology,”
said Chris McCann, vice president of 1-800-FLOWERS.
“We’re thrilled about Microsoft’s plans to implement eShop’s technologies in a more comprehensive electronic commerce solution. Being the pre-eminent brand in the retail floral industry, we are very pleased at this huge opportunity for us to improve our service to online customers and a more strategic approach to managing online commerce.”

Microsoft to Provide Integrated Merchant Solution

The Microsoft Merchant product integrated with eShop’s technologies will provide the electronic-commerce solution that Internet merchants have indicated they want. Based on in-depth customer research, it is clear that merchants need solutions that enable them to do the following:

  • Maximize online sales by:

    • Providing product information to customers easily with support for various product attributes (e.g., sizes, colors)

    • Enabling customers to locate products and product information easily within a site (by making use of sophisticated database-search technology)

    • Implementing target merchandising and promotion efforts to specific groups

  • Provide industrial-strength security to protect customers from fraud and safely route payment transactions from merchants to payment processors

  • Profit from a cost-effective Internet retailing solution that:

    • Integrates smoothly with existing automated back-office operations and order-processing, inventory and fulfillment systems

    • Builds and manages online stores dynamically, starting with a turnkey base but also providing tools for customization

    • Takes advantage of the scalability of solutions based on the Windows NT®
      operating system to incorporate and manage hundreds of thousands of product SKUs

  • Easily manage complex challenges of:

    • Setting up distinct storefronts or Internet malls that host different merchants, brands, themes or storefronts

    • Using a wide array of Web authoring tools and content management tools to enable rich customer experiences

    • Conducting traffic and buying-behavior analysis

Microsoft will immediately begin incorporating eShop’s technologies into its Merchant product line in the Internet platform and tools division and is planning to deliver a beta of Microsoft Merchant in August 1996 through a special preview program. The final Microsoft Merchant product is scheduled to be broadly available in the fourth quarter of 1996. In addition to incorporating eShop’s critical technologies, Microsoft will incorporate eShop co-founders Arnold Blinn, Will Poole and Greg Stein, who will join Microsoft to help drive forward its electronic-commerce effort.

Microsoft Merchant Adds Internet Retailing Component to


Microsoft Merchant will integrate with and extend the platform for commercial Internet services, code-named
the first solution designed specifically for Internet service providers (ISPs), network operators, cable companies and commercial Web sites. Microsoft Merchant, along with other server products in the
platform, will offer the power to support tens of thousands of concurrent users, the scalability to support millions of users per day, and the openness to work with applications and extensions developed by Internet developers. The
platform will include service to enable Internet Mail, News, Chat, White Pages, Personalization, Information Retrieval and Replication.

Microsoft Merchant Will Use New Microsoft Internet Security Framework

On June 3, Microsoft announced a comprehensive cross-platform security framework for electronic commerce and online communications that supports Internet security standards, called the Microsoft Internet Security Framework. This open and interoperable framework of technologies will serve as the security architecture for Microsoft Merchant and will support several new technologies including a set of certificate services based on CryptoAPI, Microsoft Certificate Server, support for client authentication, a digital wallet and customizable secure messaging APIs. Microsoft Merchant will also enable the implementation of the Secure Electronic Transactions (SET) protocol for credit-card transactions, secure transfer of personal security information, and support for secure sockets layer (SSL) and private communications technology (PCT).

“Microsoft’s new Internet Security Framework will go a long way toward removing the hurdle of limited security on the Internet,”
said Matt Kursh, eShop’s chief executive officer.
“eShop’s technologies and expertise, combined with Microsoft’s Merchant solution and Internet Security Framework, provide the critical components necessary for a merchant’s success.”

MSN to Support eShop Plaza Merchants

Microsoft’s acquisition of eShop brings together two leading online shopping services. One is eShop’s critically acclaimed eShop Plaza, launched in November 1995, which includes stores from several leading online merchants. The other is the MSN
Mall on The Microsoft Network, which offers exceptional shopping for over 1 million members of the MSN online service. MSN will work with eShop Plaza merchants to transfer their offerings to MSN. By bringing together eShop Plaza and MSN Mall merchants and establishing new relationships with high-quality retailers and shopping Web sites, MSN plans to be the most vibrant and complete shopping destination on the Internet and a great way for merchants to reach and sell to millions of online customers.

Microsoft Electronic Commerce Solutions: Enabling Internet Merchants

Microsoft is committed to providing Internet merchants with the cost-effective commerce solutions they have been looking for: robust security infrastructure and turnkey electronic-commerce applications built on the unparalleled performance, extensibility and scalability of Windows NT, the Microsoft BackOffice
family and ActiveX

Founded in 1991, eShop Inc. developed the first online multimedia software technology that provides powerful merchandising capabilities for merchants and vibrant shopping experiences for customers. The company was formed to utilize state-of-the-art technology to provide the most convenient and rich shopping experience possible to consumers worldwide.

Founded in 1975, Microsoft (NASDAQ
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

Microsoft, Windows NT, MSN, BackOffice and ActiveX are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

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